Net Present Value Analysis and the Wealth Creation Process: A Case Illustration

Authors

  • Abdelhafid Benamraoui University of Westminster
  • Surendranath Rakesh Jory University of Sussex
  • Devkumar Roshan Boojihawon University of Birmingham
  • Nnamdi O. Madichie Canadian University of Dubai

Abstract

This case is intended to help students on accounting undergraduate and postgraduate courses deepen their understanding of capital budgeting. We introduce a working example and hypothetical case to show that knowing an investment project’s net present value (NPV) is important but is not sufficient. Shareholders would also like to know how and when a project pays the excess wealth it generates. In the case we show in monetary amounts, how much each group receives in every time period; how much is received in the form of excess wealth by the existing shareholders; and, when does that excess wealth starts to accrue. The case can be used specifically in the final year undergraduate and postgraduate accounting study programmes.

Author Biography

  • Abdelhafid Benamraoui, University of Westminster
    Accounting, Finance & Governance Principal Lecturer

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Published

2017-01-12

Issue

Section

Articles

How to Cite

Net Present Value Analysis and the Wealth Creation Process: A Case Illustration. (2017). The Accounting Educators’ Journal, 26. https://www.aejournal.com/ojs/index.php/aej/article/view/346